The boards of LondonMetric and Highcroft have agreed the terms of a recommended all-share offer that will see LondonMetric acquire the entire issued and to be issued share capital of Highcroft.
The acquisition values each Highcroft Share at 842.1p and the entire issued and to be issued share capital of Highcroft at approximately £43.8m and represents a premium of approximately 40.4% to the closing price per Highcroft share of 600p on the latest practicable date.
Under the terms of the deal, Highcroft shareholders will be entitled to receive 4.65 new LondonMetric share for each Highcroft share they hold.
The statement announcing the deal said that the boards of Highcroft and LondonMetric believed that the acquisition had a compelling strategic and financial rationale and would provide Highcroft shareholders with the opportunity to crystallise a significant premium to the current Highcroft share price.
Highcroft shareholders would also be given the opportunity to remain invested in a “highly rated and significantly more liquid company that has a 10-year track record of uninterrupted dividend growth” and benefit from LondonMetric’s greater scale.
The statement added that the directors of Highcroft, who have been advised by Shore Capital on the financial terms of the acquisition, “unanimously consider the terms of the deal to be fair and reasonable” and “intend to recommend unanimously that Highcroft shareholders vote in favour of the scheme at the court meeting and vote in favour of the resolution to be proposed at a general meeting”.
In addition, LondonMetric has received irrevocable undertakings to vote in favour of the deal from the supporting non-director shareholders in respect of, in aggregate, 2,964,517 Highcroft shares, which represents approximately 56.94% of the issued share capital of the REIT.
Andrew Jones, chief executive of LondonMetric, said: “This transaction adds complementary assets in our favoured sectors on an attractive basis across all key property metrics. It supports our strategy of greater consolidation within the sector. We are confident of our ability to extract economies of scale to deliver both value and earnings accretion. We will immediately begin to integrate the Highcroft portfolio and work towards disposing of approximately 20% of assets that are deemed non-core.”
Charles Butler, non-executive chairman of Highcroft, added: “The Highcroft board believes that the acquisition is a good outcome for all Highcroft shareholders who will receive new shares in LondonMetric, which is a highly rated company with a strong history of paying dividends.
“As a small company, Highcroft would over time struggle to remain competitive and be able to maintain or even grow its future dividends – something which we believe is key to our shareholders. In addition, the acquisition also has the support of the primary members of our two key shareholder groups representing approximately 56.94% of our shares in issue.”
